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Time to tax online retailers

The quote comes from Greg Danz, owner of Zandbroz Variety store in downtown Fargo, who was talking to Forum reporter Dave Olson.

But it could have come from anybody running a brick-and-mortar business competing with online retailers.

The U.S. Senate is poised for a final vote Monday on a bill that would give states the authority to force online retailers to collect sales taxes on goods shipped to places like Minnesota and North Dakota.

The House will eventually vote on the bill, too, and unlike past attempts there is growing consensus a law will be enacted this time around.

Danz told the Forum that the fact that many online retailers don’t collect sales taxes has been a concern of independent bookstores like his for a long time.

“That’s probably our biggest form of competition these days – the Amazons of the world – and they’ve gotten away without (collecting) it,” Danz said.

U.S. Sen. Al Franken has pushed hard for the bill, and recently used Norby’s Department Store in Detroit Lakes as an example of the Main Street businesses that want the playing field leveled in order to compete with the online giants.

Franken says Norby’s is often a victim of what’s called “show-rooming,” in which a customer checks out merchandise in the store, takes a picture with a smartphone and then decides to buy the item from an online retailer.

Franken says Minnesota lost nearly $400 million in revenue in 2011 from taxes that were owed but not collected on Internet sales. He says big retailers like Target and Best Buy support the legislation.

Giving Internet retailers a break may have made sense a few years ago when they were just getting started, but now it just penalizes local businesses that pay taxes, donate to the community, and play by the rules. Although a sales tax is legally required on online purchases, sellers are not required to collect it and buyers usually do not take it upon themselves to report and remit any tax that is due.

The situation puts Main Street retailers at a disadvantage compared to retailers who sell over the Internet or by some other remote means.

Cities and counties that have a sales tax, as well as the state, rely on the revenue to provide services to their residents and to build and maintain a high-quality infrastructure for the businesses operating there.

Minnesota Sen. Amy Klobuchar also supports the sales tax.

She said small Minnesota businesses from Red Wing to Eveleth need a level playing field to compete against online retailers.

“Unfortunately, too many Minnesota businesses are put at a disadvantage because of a loophole in our tax code,” she said.

Franken said Minnesota’s retail industry represents about one in five jobs and those retailers need to compete on price every single day.

“The current sales tax system makes it impossible for them to compete,” he said.

Nobody likes taxes, but it’s worse when the system doesn’t treat all players equally. It’s high time for the law to be reformed.